China's privately controlled Jiangsu Eastern Shenghong Co Ltd (000301.SZ) said on Wednesday it had entered a preliminary deal with Saudi Aramco for the Middle Eastern oil major to become a minority stakeholder in its refining and petrochemical unit.
Under a framework agreement, Saudi Aramco (2223.SE) intends to become a strategic investor in Jiangsu Shenghong Petrochemical, which operates a refinery and petrochemical complex in the eastern province of Jiangsu.
In a separate statement, Aramco said it was looking at investing 10% in Shenghong Petrochemical, adding that companies also intend to cooperate on a large expansion project, although Aramco did not provide details.
The companies are willing to cooperate in areas such as long-term crude supply and marketing of refined fuel and chemical products, as well as licensing high-value added manufacturing technology, according to a stock filing.
The parties will carry out due diligence and evaluation works to follow up on this agreement, the company added.
Shenghong Petrochemical, one of China's newest refineries, operates a 320,000 barrel-per-day plant in port city of Lianyungang.
Under a similar alliance, Aramco said in March it had agreed to acquire a 10% stake in privately controlled Rongsheng Petrochemical Co Ltd (002493.SZ) for about $3.6 billion, an investment attached to a 20-year crude oil supply deal with Rongsheng-controlled Zhejiang Petrochemical Corp.
